How OfferUp Works To Safeguard Both Buyers And Sellers

Digital marketplaces have become beloved by buyers and sellers — and fraudsters. Nick Huzar, CEO of OfferUp, says most current authentication standards are either too lax — sacrificing security for simplicity — or too stringent, which hurts the user experience. In the latest Digital Fraud Tracker, Huzar tells PYMNTS why finding the perfect balance means depending on “smarter authentication,” and using tools like AI and machine learning to fight fraud while keeping the consumer experience convenient.

Sometimes, buying something brand new just won’t cut it. Whether consumers are looking for vintage, out-of-stock or hard-to-find items, or simply trying to save a few bucks, they have long bought and sold items secondhand.

These days, though, secondhand purchases don’t typically happen in thrift shops or consignment stores anymore. Customers and merchants instead turn to digital marketplace platforms like eBay, Amazon, letgo and OfferUp, which create new ways for sellers and buyers to connect through online channels. These platforms have brought in nearly $19 billion in revenue globally this year alone, and they are expected to reach more than $40 billion in annual revenue by 2022.

However, while these marketplaces have created new eCommerce opportunities, they’ve also provided new avenues for digital fraudsters. Cybercriminals are now using techniques like scraping content, friending legitimate users and setting up proxy accounts to attack both buyers and sellers, and steal their information.

Fraud is a huge problem for digital marketplaces, particularly those like OfferUp, which also connects consumers who want to buy or sell items. These platforms risk losing business if buyers and sellers do not trust them to guard against digital fraud, according to Nick Huzar, CEO and co-founder of OfferUp. That’s why Huzar and his team are leveraging features like user profiles, data analytics and artificial intelligence (AI) to protect customers who do business on the platform.

“Our ability to build trust between OfferUp and our users is essential to everyone having a successful experience in the marketplace,” Huzar told PYMNTS in a recent interview. “By definition, an online marketplace doesn’t directly control the quality of the products or services that are bought and sold on its platform, which is why it’s critical to put mechanisms in place to ensure users have little or no fear about conducting business in our marketplace.”

Fighting Digital Fraud

One reason digital fraudsters find marketplace platforms attractive is that they give criminals the ability to target many merchants of varying sizes, putting pressure on the platforms to protect not only buyers, but sellers as well. As a result, companies like OfferUp are putting in place security solutions to protect both segments of their customer base.

Huzar explained that users must create profiles before doing business on OfferUp, and the company uses that information to help verify transactions. It also reviews other aspects of a transaction, including the items being sold, communication between buyers and sellers, and the locations they pick for offline interactions.

“Over the past seven years, we’ve integrated multiple safety layers — on and off the platform — to provide our users with a safer OfferUp experience,” he said. “The technologies we use are generally built internally. Building our own technology is not only an investment in this space, but the most effective, because [it’s] highly customized to address the issues we see in our marketplace.”

The company is also building its own fraud prevention engines through algorithmic tools like AI and machine learning (ML), which review massive troves of data in near real time, searching for suspicious interactions and transactions or any other signs of fraud.

“Our mission is to build the simplest and most trustworthy local marketplace, and data is how we balance the two,” he said. “It helps us balance the customer experience of simplicity with security and fraud controls, to use the appropriate level of friction between touchpoints using intelligence, analytics and data.”

The Future Of Digital Fraud Prevention

Huzar said the industry must move forward with more intelligent authentication and digital fraud prevention tools to be truly prepared to fight cybercrime in the future. He claimed that most of the strategies currently available to companies like OfferUp don’t adequately balance customer experience and security. Consumers expect online interactions and transactions to be simple and convenient, he said, which often puts pressure on marketplace platforms to choose between speed and simplicity or boosting security.

“The future of our space should be about smarter authentication,” Huzar said. “Authentication today is often either too lax or too stringent. [It can be] too lax because many companies want to minimize friction, and too stringent where companies add too many registration hoops, leading to a horrible customer experience and abandoned transactions.”

Instead, he called for tools that allow companies in the space to use ML, AI and other technologies to target specific users or transactions. This, he said, would allow for them to quickly and simply authenticate legitimate buyers and sellers.

The development of smarter security measures could play a huge role in the future of companies like OfferUp, eBay, Amazon and others. When it comes to marketplace platforms, preventing fraud and establishing trust is the key to building a successful business.